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Vietnam Innovation Strategy Should Focus on Tech Adoption: Government Report

According to the Vietnam: Science, Technology, and Innovation (STI) Report 2020 released by the Ministry of Science and Technology and the World Bank, Vietnam’s strategy regarding the development of STI initiatives should focus on the diffusion and adoption of new technologies in companies. Not just research and invention, but for significant productivity and economic gains.

Areas that require improvement

In comparison with its structural peers and neighbouring countries, Vietnam’sinnovation capacity needs improvement. According to the Global Competitiveness Index 2017-2018, Vietnam ranks 55th out of 137 countries, behind Singapore (3rd), Malaysia (23rd), China (27th), and Indonesia (36th). It comes in just above the Philippines (56th). While the country has successfully expanded and diversified its exports, structural change towards high-technology and more knowledge-intensive production has been comparatively slow.

According to the report, Vietnamese firms showed a lower innovation level than what is expected for the country’s level of development, particularly in terms of product or process innovation. Vietnamese firms innovate more than those in Malaysia, Indonesia, Thailand, and Turkey but less than those in China, the Republic of Korea, Singapore, and the Philippines. Domestic firms trail behind their peers on radical product innovation. Fewer firms in Vietnam (53% of product innovators) report their main innovation to be new to their market, compared to Malaysia (75%), the Philippines (62%), and Thailand (86%).

A similar pattern could be observed among firms in the manufacturing sector, one of the country’s most important economic pillars. In a recent survey conducted by the National Agency for Science and Technology Information (NASATI) only 49% of firms reported innovating in terms of product or process. While larger and joint-venture firms in Vietnam are more likely to undertake product innovation than are smaller and domestic firms, they are no more likely to undertake radical product (new to the market) or process innovation. On balance, firms operating in the services sector are less likely to undertake innovation compared to firms in the manufacturing sector.

Recommended solutions

As Vietnam seeks to reach high-income status by 2035, global trends in automation, export concentration present new opportunities and challenges for the country’s export-led manufacturing growth model. With the rapid development of technology and automation, Vietnam’s major manufacturing and export sectors (often characterised as labour-intensive) could be disadvantageous.

To address these issues, the report has made a number of recommendations for the country’s policymakers and enterprises, including a strong focus on the adoption of new technologies in firms, especially in small-to-medium-sized ones. The government must play an active role in the promotion of technology and innovation and in encouraging innovative ventures and finance through a simplified and streamlined process of granting firms support.

Companies must find ways to attract skilled workers, especially Vietnamese workers from abroad. They should improve managerial skills for innovation through business associations networks. Also, a number of long-term solutions include more robust public-private sector collaboration. The country should increase the allocation of resources to instruments that facilitate technology adoption and strengthen the capacity of the Intellectual Property Rights protection system to enforce patent protection copyrights and industrial property rights.


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